from the there-are-limits,-people dept

Even a notoriously patent-friendly court like the district court in East Texas has admitted that there are limits to what's patentable. Notorious patent troll Uniloc, whose name has been appearing quite frequently lately, has lost one part of its big cases, against Rackspace, after the district court in Tyler, Texas has said one of the patents in question in this lawsuit, US Patent 5,892,697 on a "Method and apparatus for handling overflow and underflow in processing floating-point numbers," is really patenting basic mathematical functions, and you can't do that.

Claim 1, then, is merely an improvement on a mathematical formula. Even when tied to computing, since floating-point numbers are a computerized numeric format, the conversion of floating-point numbers has applications across fields as diverse as science, math, communications, security, graphics, and games. Thus, a patent on Claim 1 would cover vast end uses, impeding the onward march of science.

While this is nice, this is just one patent in that particular lawsuit, and Uniloc has dozens of other patents that it's using in other lawsuits. And Uniloc shows no signs of slowing down. Just the other day it filed 12 new lawsuits.

from the promoting-the-progress-of-destroying-a-business dept

We were just reporting on a hospital tech that declined to seek a patent for his creation, laughably stating that there are more important things than money (what a buffoon). He serves as a nice contrast to the wonderful world of patent trolls. One man is trying to help people and thinks that's more important than patents, while patent trolls are trying to leech off of producing entities and think that there is nothing more important than the patent (except perhaps the blood of small kittens or something). Often times they don't bother to produce anything, instead vampiring off of actual...you know...businesses.

Reader dfed alerts us to one such vampiric occasion, in which a non-producing entity patent troll is suing the developers of X-Plane, a rather innovative flight simulator. Uniloc has filed (pdf) for infringement on a patent, (6,857,067) for a "system and method are provided for preventing unauthorized access to electronic data stored on an electronic device." If the Uniloc name sounds familiar to you, you may remember when we wrote about it suing Minecraft (over the same patent) with such fervor that its lawyers couldn't be bothered to spell the game's name correctly. This patent was filed back in 2001, after, as X-Plane developer Laminar Research notes, several other software companies prior-arted all over this patent.

In 1988, FlexNet used a system to check a central server for permission to run a computer program.In 1989, Sassafras developed KeyServer, a computer program that checked with a central server for permission to run a program only if it had been purchased.In 1999, a program called “Clearcase” checked with a central server for permission to run a program only if it had been purchased. (Link here and instructions here.)

Laminar Research initially wrote a blog post on their site posing the same questions I imagine many victims of patent trolls have like whether they should be doing business in the United States. Such wonderful consequences our patent system produces. They were also initially seeking donations to fund their defense, which they were advised would cost roughly one and a half million dollars. Fortunately, because Uniloc is a patent troll, they also sued 9 other software developers and all the defendants are banding together to share the costs of defending themselves.

But that isn't the point. The point is that they shouldn't have to be in this position in the first place. For these developers to have to defend themselves in costly litigation against a company that can't be bothered to produce anything beyond a patent suit for something used years before its filing is a burden in direct conflict of the stated purpose for patents to begin with. I can't explain the silliness of this better than X-Plane's developer did on his site.

When I explained this to my Mom, she listened to my entire speech on Unilocs’ Lawsuit against me, my ideas on patent and litigation reforms, my thoughts on Uniloc and the lawyers representing them, and the total lawsuit cost of over $1,500,000, 3 years of stress to me and my wife, and the possible loss of a grandchild to her, and all she could stammer was “I don’t understand… what did you do that is WRONG?”All I could really answer was: “Well… I wrote a flight simulator for Android”.

And producing that software is supposed to cost the producer over a million dollars? What a joke.

from the yes-in-eastern-texas dept

Last time we visited Notch, the creator of Minecraft, and his legal woes, he was being sued for trademark infringement over his company Mojang's latest game, Scrolls. That suit was eventually settled—though unfortunately not over a Quake 3 match as Notch proposed. We probably won't get a similar offer from Notch in this new scenario: he's being sued for patent infringement by the Eastern Texas-based patent troll Uniloc. This is the same Uniloc whose suit against Microsoft led to the CAFC ruling that 25% of all profits for a single patent infringement claim was just a tad excessive.

So why exactly is Mojang getting sued for patent infringement? Well, Uniloc was awarded a patent for a "System and Method for Preventing Unauthorized Access to Electronic Data" back in 2005 (Patent # 6,857,067). The primary claim is that since Mojang has an Android game that uses a network to communicate with an authorization server to perform a license validation check, Mojang has willfully infringed on the patent. The game named in the suit is "Mindcraft"—which of course is not actually the name of Mojang's game. While it is very possible that Mojang may be infringing this patent, Notch stated in a follow up tweet that he is more than willing to "throw piles of money at making sure they don't get a cent". On that same front, this patent could also be invalidated if it is successfully challenged in court.

Perhaps Notch can take some solace in knowing that he is apparently not alone in being sued. According to Reddit, a number of other game companies are being sued for infringing this same patent. This list includes the likes of Gameloft, EA, Square Enix, Halfbrick Studios and a number of other developers. This practice of suing multiple parties for infringing a single patent is a typical sign of a patent troll. It is also a symptom of the huge mess that is software patents.

But there is no way in hell you can convince me that it’s beneficial for society to not share ideas. Ideas are free. They improve on old things, make them better, and this results in all of society being better. Sharing ideas is how we improve.

A common argument for patents is that inventors won’t invent unless they can protect their ideas. The problem with this argument is that patents apply even if the infringer came up with the idea independently. If the idea is that easy to think of, why do we need to reward the person who happened to be first?

The post is short but full of some really good insights. Some of them we have touched on before, such as the idea that patents are actually harmful to the software industry. This suit also illustrates another point we have recently written about: how it is impossible to avoid infringingsomeone's patent. On the bright side, as more such patent infringement suits are filed and more companies and individuals are harmed by the current patent system, perhaps we will see those in Washington take notice and implement some real reforms.

from the made-up-rules,-made-up-results dept

In the past, we've mocked the popular "25% rule," which many patent system supporters have used in legal cases going back decades. The basic gist of this rule is that, in calculating "damages" for infringement, the patent holder should be entitled to 25% of the profits as an approximation of what a "reasonable license fee" would have been, while the company, who actually took on all the risk, should get the remaining amount. Patent system supporters have often pointed to this as being a generous solution, since it leaves 75% of the profits to the company who supposedly infringed. Of course, it leaves out the fact that any modern technology product today probably involves hundreds, or even thousands, of things that someone else will claim patents on. Still, the 25% rule is brought up regularly,and is rarely questioned by courts... until now.

In a ruling in a patent infringement lawsuit between Uniloc and Microsoft, the appeals court for the Federal Circuit (CAFC) finally pointed out just how ridiculous the 25% rule really is and suggested that it should die a quick death. The court noted how the 25% rule is widely used, and even how the district court was troubled by such a "rule of thumb" rather than any actual look into damages, but that since it was so widely used, the lower court effectively shrugged its shoulders, and let the 25% rule remain. The appeals court rejected this commonly used tool, however, noting serious problems with it. CAFC admits that it has been just as guilty in accepting the 25% rule in the past and many other courts have simply used it just because everyone else is using it -- but no one's ever really asked a court if it's legitimate. But, no longer:

This court now holds as a matter of Federal Circuit law that the 25 percent rule of thumb is a fundamentally flawed tool for determining a baseline royalty rate in a hypothetical negotiation. Evidence relying on the 25 percent rule of thumb is thus inadmissible under Daubert and the Federal Rules of Evidence, because it fails to tie a reasonable royalty base to the facts of the case at issue.

The court then points out that the patent holder has the responsibility for demonstrating what the actual damages are and they must sufficiently tie the damages estimates to the facts of the case -- without doing that, and just using a rule of thumb, means that "the testimony must be excluded." The court doesn't beat around the bush here:

The meaning of these cases is clear: there must be a basis in fact to associate the royalty rates used in prior licenses to the particular hypothetical negotiation at issue in the case. The 25 percent rule of thumb as an abstract and largely theoretical construct fails to satisfy this fundamental requirement. The rule does not say any-thing about a particular hypothetical negotiation or reasonable royalty involving any particular technology, industry, or party. Relying on the 25 percent rule of thumb in a reasonable royalty calculation is far more unreliable and irrelevant than reliance on parties’ unre-lated licenses, which we rejected in ResQNet and Lucent Technologies....

[...]

.... Beginning from a fundamentally flawed premise and adjusting it based on legitimate considerations spe-cific to the facts of the case nevertheless results in a fundamentally flawed conclusion....

Separately, CAFC also rejected the idea of using the "entire market value rule," in determining a reasonable royalty rate. Again, the court dismisses this commonly used rule as not being tied to the specifics of the situation. This rule involves a patent holder trying to determine the reasonable royalty rate on the overall market value of a product, rather than figuring out the actual market value of the invention in question. This trick is useful for patent holders because they can toss out some huge number, to make any (otherwise huge) number sound reasonable. For example, in this case, the patent holder pointed out that Microsoft had made "approximately $20 billion" selling "the infringing product." When you use an amount that large, then a few hundred million dollars seems "small." The full market value is misleading, and CAFC makes that clear:

This case provides a good example of the danger of admitting consideration of the entire market value of the accused where the patented component does not create the basis for customer demand.... The disclosure that a company has made $19 billion dollars in revenue from an infringing product cannot help but skew the damages horizon for the jury, regardless of the contribution of the patented component to this revenue.

The court highlights how the patent holder's lawyers played up the "approximately $20 billion," and mocked a proposed $7 million royalty as only being "an effective royalty of approximately .000035%," which ignored, of course, that the patent in question was a very, very, very minor part of the larger product. In fact, Uniloc's lawyer specifically asked a witness:

And at the end of the day, the in-fringer, Microsoft, who violated the patent law, they get to keep 99.9999% of the box and the inventor, whose patent they in-fringed, he gets the privilege of keeping .00003%?

It's not hard to see how that clearly biases the jury. But CAFC is thankfully rejecting that too. While I often find that CAFC sides too strongly with patent holders, it's nice to see it pushing back a bit on some of the more ridiculous "rules of thumb" used for damages that are way out of scale with reality.